In 2016, Harvard researchers found that nearly half of renters nationwide were cost-burdened. That means that they were spending thirty percent or more of their income on rent.
In 2018, the National Low Income Housing Coalition found that a renter who worked forty hours per week making minimum wage could not afford a typical two-bedroom apartment anywhere in the country without being cost-burdened [1].
Every year, Americans are facing widening inequality. Wage growth is stagnating, housing costs are continuing to increase, and more and more people are unable to comfortably pay for housing.
The easy answer to this problem is to simply build more housing. Unfortunately, thanks to market forces, policy decisions, and demographic changes, building affordable housing has become a difficult and politically-charged discussion.
One company is changing all that by turning old hotels into affordable housing.
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Old Hotels, New Purpose
In Branson, Missouri, there is an old Days Inn Motel that has been sitting vacant for eight years. A construction company based out of Los Angeles has now purchased the property and is turning it into affordable housing [2].
Richard Rubin is the founder of Repvblik. He started doing these types of renovations back in his home country of South Africa. With his company, he believes that these kinds of efficient fixes can help solve the low-income housing shortage in America.
At the old Days Inn in Branson, they were able to create studio and one-bedroom apartments by breaking through some walls. These apartments will cost between 495 and 695 dollars per month to rent.
Rubin believes that this price is perfect for people who do not make enough money for normal housing, but who aren’t quite poor enough to qualify for low-income housing.
Affordable Doesn’t Mean Barren
The term “affordable housing” doesn’t often inspire images of spacious, beautiful apartments. The Day’s Inn Project, however, known as Plato’s Cave, is not barren or unkempt in any way. Each apartment comes with freshly painted walls and utilities. They also have amenities like a gym, basketball court, onsite laundry, smart TVs, laminated wood floors, and air conditioning.
The company has also purchased several other hotels, with the mission of turning many unused commercial spaces into affordable homes [2].
No Federal Funding Necessary
Critics of this model have said that it cannot be done without federal funding. Ruben is trying to push each project through without government assistance to address the urgent need for affordable housing across the country.
“We were told with this market that it couldn’t be done,” says Rubin. “Everyone said, ‘You can’t do it without low-income housing tax credits,’ which is completely incorrect. You absolutely can.” [1]
It costs a sizable amount of money to buy old commercial properties. Selling them as cheap rental properties to high-risk renters, then, seems like a precarious decision. For this reason, Ruben initially had difficulty finding investors for his project. Today he has ten properties with a total of two thousand units.
Of course, Ruben is not resting on his initial success. He hopes that number will grow to twenty thousand units over the next couple of years.
Affordable Housing Helps us All
Providing affordable housing to those who need it does not just improve their lives. It also improves the communities in which they live.
Affordable housing provides household stability and economic security. It creates a stable environment for children, which helps them do better in school. When people are spending less on housing, they have more to spend on food and health care. They also have access to amenities in quality neighborhoods. All of these things improve their health.
When people are spending a lower percentage of their income on housing, they are able to allocate that money elsewhere. This increases local purchasing power and creates new jobs and tax revenues. This, in turn, has a positive effect on the property values within a community [3].
As the cost of housing continues to rise, the need for spaces like Plato’s Cave will also increase. Solutions like this are efficient, effective, and maybe the best way to ensure everyone has a comfortable place to live.
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